Workers_group_in_factory_Manilla_in_Turku representing a Social Audit

What is Social Auditing?

A social audit is a tool used to assess the effects of different programs and policies on communities. The main goal of a social audit is to allow people who were negatively affected by certain projects, such as land acquisition for development projects, get a chance to voice their concerns about how they have been affected. In addition, the social audit also allows the government or business to remedy the situation.

How is social auditing done?

The process begins when people who feel they have been negatively affected by a certain project come forward and make their grievances known to the government or private company that is involved in the project. If it is found that these people are indeed correct, an investigation will be conducted into how things were handled throughout of the project. If it is revealed that the process was flawed, the company will acknowledge their mistake and put a plan into action to fix issues that have been found.

Why is social auditing important?

By allowing outside parties to audit how business is done, or in some cases, how aid money was spent, the social auditing process helps weed out any corruption that may have existed previously. It also allows for better relations between companies and communities in which they operate. They provide proof of Corporate Social Responsibility (CSR). By identifying inconsistencies in policies and procedures, people who are negatively affected will be able to voice their concerns to those who are in charge. This way, the project will not only run more smoothly, but it will be more beneficial for all parties involved.

What is an example of a social audit?

A manufacturer of laptops recently made the decision to dismantle a factory in South Africa without taking into account how it would affect the community. When word got out about what the company had done, many people came forward to voice their concerns about how this move has affected them. After conducting an investigation, more information was revealed. In addition to breaking labor laws by firing the employees, the company also evaded taxes. Once these facts were released to the public, a social audit began and those affected were able to voice their concerns. In order fix the faults found during this process, a plan was put into action which includes paying back taxes as well as helping retrain those who have been laid off from the factory.

Auditing tools and support

The most popular example of social auditing is the Human Rights Impact Assessment. This tool is used to track what kind of effect a certain project will have on the people who use it, particularly how it affects their rights. The assessment can also be used for community relations by giving people in charge an idea about how locals feel about development projects. Community members are able to voice their concerns about projects that affect them before they even begin. By doing this, these projects will have a much greater chance of being beneficial for everyone involved.

Who performs a social audit?

Social audits can be performed by a variety of individuals and organizations, including non-governmental organizations, local communities, independent auditors and government agencies. Organizations that have an interest in making sure their policies or practices are ethical often conduct social audits to learn more about how they impact the community.

Example: Microsoft has stated that it will perform a social audit for any project that has an annual budget of more than $5 million. This way, Microsoft is able to track the progress and find issues within the project without disruptions while it is still in progress.

Is a social audit a statutory audit?

A Social Audit is a type of an audit, as the word ‘Social’ denotes. As such it is not a statutory audit. A statutory audit is defined as “An examination of financial records or accounts to check for accuracy and completeness of information, in order to form an opinion on whether they are free from material misstatements.”

As seen in this definition, statutory audits must rely on the financial records of assets, income and liabilities. Social Audits may focus on these (and other) aspects but are not limited to them. The information provided by social audits allows for decision-makers to meet their obligations towards stakeholders so that projects can be run more efficiently, effectively and ethically.

What is a social audit in accountancy?

Accounting is the measurement, processing and communication of financial information about economic entities such as businesses and corporations. This includes supporting evidence in the form of documents and records. A socially responsible company will conduct a social audit to determine its social impact on their surrounding community, environment and stakeholders. The financial reporting process will be used to retrieve relevant information about the company’s social impact. A financial statement is a good source of evidence because it shows the results of the company’s business activities, providing insights into its overall performance and future prospects. This is why an annual report should not only disclose the financial information but also information regarding ethical issues that have been taken into consideration.

What information is in a social audit?

Social audits can contain a variety of information, depending on the social audit. Information may include data collected from community members about their concerns with projects or practices, as well as complaints filed regarding a project or practice. There may also be any relevant information regarding building permits, employment or contracts that are of interest to investigators. It may also touch on transparency in reporting any issues regarding the effect on the public or environment, accounting and financial transparency plus community development and financial contributions.

What were some issues found through a social audit?

There are many examples that show how people find issue with projects and practices. These issues can range from human rights violations to discrimination of cultures, languages or religions. There may also be concerns regarding environmental protection and pollution, as well as health and safety issues resulting from the project or practice. Many times these issues are discovered through social audits before they become serious problems that can cause irreparable damage to a community or environment.

6 Types of Social Audits

There are many different types of social audit. The most common ones include:

  1. Economic Audit: These audits examine the costs and benefits of a certain project or practice, looking at resource allocation, where money is spent and made. They also look at how externalities affect things like community development, health care infrastructure and housing needs for people in impoverished areas.
  2. Environmental Audit: These are similar to economic audits but they also consider the impact on the environment. Sometimes there may be heavy pollution of soil, water or air that can affect human health. A social audit in this area would look at how the project has affected these things and whether or not it was done responsibly.
  3. Social Risk Audit: This is where social audits assess the risk of various negative consequences such as protest and violence, litigation and criminal activities. They also look at specific impacts on people such as indigenous groups, women and children and migrants.
  4. Community Audit: These audits examine community-based projects that provide services or employment to residents in a given area. They often help these communities enhance their capacities so they can take more ownership of these services or employment opportunities.
  5. Human Rights Audit: These audits are often done by non-governmental organizations, agencies and other third parties to check if human rights have been abused in a certain area. Areas that are typically looked at include the use of child labor, freedom of association and assembly, freedom from discrimination and rights of the indigenous people.
  6. Contract Audit: These audits examine how projects or practices affect people under contract with a company, for instance whether they are paid fairly, treated humanely and allowed to organize themselves if needed. They also look at accessibility to services such as medical treatment in case of injury on the job.

In conclusion, a Social Audit is an examination of a project’s social impact on the stakeholders affected by it, conducted after the project has been completed. This audit can be performed by anyone with an interest in making sure initiatives are beneficial for all parties involved.

Caveats and Disclaimers

We have covered many topics in this article and want to be clear that any reference to, or mention of corporate social responsibility, social audit, social responsibility, social audits, corporate social audit, social audit process, corporate governance, social audit findings, business administration, local social service providers, community involvement, human resources, content media website developer, business partners, corporate social, positive image, objectives, conduct, accounting, example, customers, strategy, profits, additional professional experience, report, organization, shareholders, assessment, initiatives, economic, accounting and financial, internal, potential impact, history, concerned, website, college marketing professor, business ethics, active business, environmental watch groups, corporate citizenship, financial transparency, public perception, environmental impact, green business, local communities, many companies, environmental influence, education writer, code of conduct, active involvement, iowa state university, small business, measurable goals, social gaps, charity records, doctoral degree, content media, key issues, company, next social audit, decision making, companies, employees, business, image of the company, irregular activities, good public perception, community, stakeholders, society or environment in the context of this article is purely for informational purposes and not to be misconstrued with investment advice or personal opinion. Thank you for reading.